• About
    • Which Energy Mix is this?
  • Climate News Network Archive
  • Contact
Celebrating our 1,000th edition. The climate news you need
No Result
View All Result
The Energy Mix
  • Canada
  • UK & Europe
  • Fossil Fuels
  • Ending Emissions
  • Community Climate Finance
  • Clean Electricity Grid
  • Cities & Communities
SUBSCRIBE
DONATE
  • Canada
  • UK & Europe
  • Fossil Fuels
  • Ending Emissions
  • Community Climate Finance
  • Clean Electricity Grid
  • Cities & Communities
SUBSCRIBE
DONATE
No Result
View All Result
The Energy Mix
No Result
View All Result
  FEATURED
Soaring Fertilizer Prices Could Deliver ‘Silver Lining’ For Emissions, But Farmers Struggle to Limit Use June 26, 2022
BREAKING: UN Nature Summit, the ‘Paris Conference for Biodiversity’, Moves to Montreal in December June 19, 2022
‘LET’S SUE BIG OIL’: Legal Team Launches Class Action Campaign for B.C. Municipalities June 17, 2022
‘It Could Have Been Any of Us’, Colleague Says, After Brazil Confirms Murders of Bruno Pereira, Dom Phillips June 17, 2022
Infrastructure Gap a ‘Life and Death’ Matter as Northern Canada Warms June 17, 2022
Next
Prev
Home Jurisdictions Canada

Kinder Morgan Siphons Billions in Subsidies, Canadian Investment Dollars

May 2, 2018
Reading time: 2 minutes

WhisperToMe/Wikipedia

WhisperToMe/Wikipedia

 

The cost of the Trans Mountain pipeline expansion could balloon to C$9 billion—far above its original $5.4-billion price tag, or its current $7.4-billion estimate—and the project has only managed to survive this long with big public subsidies and the willing support of Canadian banks, independent economist Robyn Allan charges in an op ed in the Vancouver Sun.

Allan, former president and CEO of the Insurance Corporation of British Columbia, calculates project subsidies above $3 billion and climbing, not including $1.7 billion in Canadian investment that went directly to Houston-based Kinder Morgan to help it pay off its debts.

The inventory begins with a $286-million special fee that Canada’s National Energy Board (NEB) approved in 2011, over the objections of Canadian oil producers. “If they need financing, then they should go to the market,” Chevron said at the time, responding to what it called an “extraordinary precedent”.

Then the NEB doubled the regulated toll charges Kinder Morgan could collect on an existing pipeline between B.C. and Washington State, bringing the company a windfall of more than $350 million per year. Allan also counts Canada’s $1.5-billion Oceans Protection Plan as a project subsidy—an analysis she says Prime Minister Justin Trudeau confirmed when he threatened to cancel the program if Trans Mountain fails.

Allan maps out a spotty financial history for the project, recalling that the U.S. company, a descendent of the disgraced Enron empire, originally claimed it would fully fund the pipeline. But “by late 2014, KMI was in financial trouble and could no longer deliver,” she writes. The $7.4-billion project estimate, a 40% increase over the original cost, emerged in March 2017, and “U.S. private capital markets summarily rejected the expansion. Kinder Morgan was unable to raise debt or equity and no joint-venture partner could be found—U.S. investors saw the writing on the wall.”

So Kinder Morgan formed a Canadian subsidiary, announced a public share offering, and sold off 30% of the value of the project. “None of the proceeds were for the expansion,” Allan writes. “The $1.7 billion raised was siphoned from the Canadian economy to pay off debt the Texas parent owed.”

Next, the U.S. parent gave the Canadian subsidiary full responsibility for raising project financing, even though Houston still held 70% ownership. “The foreign parent had effectively washed its hands of all financing responsibility while retaining the majority of any benefits for KMI’s U.S. shareholders,” she writes.

Yet Canadian banks were only too happy to comply, helping Kinder Morgan Canada raise $4 billion for pipeline construction, a $1-billion contingency fund against cost overruns, and $550 million in preferred shares.

With all of those moves in mind, Allan takes Kinder Morgan to task for announcing in its April 8 ultimatum that it won’t be updating its cost or scheduling estimates for the troubled project.

“Why not?” she asks. “If there were any time the Canadian public has a right to know the likely cost of the expansion, it’s now. Especially since taxpayers are being set up to pay for it.”



in Canada, Community Climate Finance, Energy Subsidies, Pipelines / Rail Transport, Sub-National Governments

The latest climate news and analysis, direct to your inbox

Subscribe

Related Posts

pxhere
Environmental Justice

Environmental Racism Bill Passes Second Reading in House of Commons

June 26, 2022
79
Graco/Facebook
Food Security

Soaring Fertilizer Prices Could Deliver ‘Silver Lining’ For Emissions, But Farmers Struggle to Limit Use

June 27, 2022
116
Gustavo Petro Urrego/flickr
Forests & Deforestation

Colombia’s President-Elect Has ‘Ambitious’ Plans to Halt Amazon Deforestation

June 26, 2022
67

Comments 8

  1. Paul Armstrong says:
    4 years ago

    kinder Morgan and all the welfare it has received is but the tip of the iceberg as far as corporate welfare in Canada. We need a big investigation on how our resources are being sold. Oil, coal, lumber and agriculture are all heavily subsidized by the taxpayers…while profits leave the country. And $500 million wouldn’t clean up a massive oil spill on the coast…would need 10 times that much.

    Reply
  2. René Ebacher says:
    4 years ago

    Kinder Morgan total revenues reached US$13.715 billions in 2017. Revenues in Canada were CA$683.8 million. Its income tax expense in Canada was $64.2 million, or 9.4% of its revenues.
    Kinder Morgan Canada reported a net income of $42.4 million in the 3rd quarter of 2017, up from $20.3 million for the same period last year.
    Kinder Morgan seems to be doing pretty well. This company, like many other companies in the oil and gas sector, don’t need any subsidies or other form of public investment.
    Trudeau, as did Harper before him at the 2009 G20 summit in Pittsburgh, promised to phase out “inefficient fossil subsidies” to the fossil fuel industry that encourage wasteful consumption. At the 2013 summit in St. Petersburg, they reaffirmed this resolution. Yet that same year, the G20 countries funnelled US$88 billion into exploring new reserves of oil, gas and coal.
    The word “inefficient” in the G7 statement indicates subsidies that distort energy markets. The OECD estimates that this type of support for fossil fuels within its member states is US$ 160-200 billion each year. But when the cost of damage from pollution and climate change is factored in, the International Monetary Fund (IMF) has estimated that support increases to a staggering US$ 5.3 trillion a year, or $10 million per minute. This is more than the total global spend on human health.
    For Canada, the 2012 G20 self-reported “inefficient fossil fuel subsidies” estimates Canada’s contribution at US$ 3.3 billion (OECD DATA) and US$ 26.4 billion (IMF POST-TAX DATA).
    Federal and provincial governments continue to provide subsidies for the exploration and production of oil and gas in Canada. It is estimated that these subsidies amount to paying companies CA$19/tonne to pollute.

    Reply
  3. pryan says:
    4 years ago

    I think that should be $286 Million not Billion!

    Reply
    • Mitchell Beer says:
      4 years ago

      Yes, thanks! Correction is made.

      Reply
  4. Mike Fletcher says:
    4 years ago

    $ 286 billion special fee? I think that’s million?

    Reply
    • Mitchell Beer says:
      4 years ago

      Nice catch, Mike, thanks. Correction is made.

      Reply
  5. Earl Richards says:
    4 years ago

    KM’s pipeline extension is doomed, if KM cannot get financing from Wall Street.

    Reply

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

I agree to the Terms & Conditions and Privacy Policy.

Trending Stories

David/flickr

U.S. Supreme Court Expected to Gut Emission Controls as Climate Scientists Petition for Plan B

June 26, 2022
580
Graco/Facebook

Soaring Fertilizer Prices Could Deliver ‘Silver Lining’ For Emissions, But Farmers Struggle to Limit Use

June 27, 2022
116
Konrad Summers/Kern West Oil Museum via Wikimedia Commons

Imperial Oil Backs Lithium Recovery Project in Alberta’s Leduc Oilfield

June 26, 2022
97
pxhere

Environmental Racism Bill Passes Second Reading in House of Commons

June 26, 2022
79
stockvault

Animal Agriculture Could Reduce Future Pandemic Risk, UK Researchers Say

June 26, 2022
73
Gustavo Petro Urrego/flickr

Colombia’s President-Elect Has ‘Ambitious’ Plans to Halt Amazon Deforestation

June 26, 2022
67

Recent Posts

Adam E. Moreira/wikimedia commons

Suspend Transit Fares, Not Gas Tax, Climate Advocates Urge Biden

June 26, 2022
55
moerschy / Pixabay

Pandemic Drives Up Support for Climate Action, Pessimism About Elected Leaders

June 26, 2022
27
hellomike/flickr

No Public Input as Canada Finalizes Climate Plan for Airlines

June 27, 2022
37
Heinrich-Böll-Stiftung Southeast Asia/wikimedia commons

Japan, Korea Sell Vietnam on Gas Amid Crackdown on Climate Activists

June 26, 2022
22
https://en.wikipedia.org/wiki/Wikipedia:Featured_picture_candidates/Barrow_Offshore_Wind_Farm

Global Offshore Wind Pipeline Doubles to 846 Gigawatts

June 26, 2022
38
TAFE SA TONSLEY/Flickr

U.S. Renewables Industries Scramble to Reuse, Recycle Before Waste Volumes Skyrocket

June 26, 2022
63
Next Post
Enron Complex: Alex/wikimedia commons

NEB Rebuffs Kinder Morgan Bid to Put Pipeline Spill Risk on ‘Corporate Credit Card’

The Energy Mix

Copyright 2022 © Smarter Shift Inc. and Energy Mix Productions Inc. All rights reserved.

Navigate Site

  • About
  • Contact
  • Privacy Policy and Copyright
  • Cookie Policy

Follow Us

No Result
View All Result
  • Canada
  • UK & Europe
  • Fossil Fuels
  • Ending Emissions
  • Community Climate Finance
  • Clean Electricity Grid
  • Cities & Communities

Copyright 2022 © Smarter Shift Inc. and Energy Mix Productions Inc. All rights reserved.

Manage Cookie Consent
To provide the best experiences, we use technologies like cookies to store and/or access device information. Consenting to these technologies will allow us to process data such as browsing behaviour or unique IDs on this site. Not consenting or withdrawing consent, may adversely affect certain features and functions.
Functional Always active
The technical storage or access is strictly necessary for the legitimate purpose of enabling the use of a specific service explicitly requested by the subscriber or user, or for the sole purpose of carrying out the transmission of a communication over an electronic communications network.
Preferences
The technical storage or access is necessary for the legitimate purpose of storing preferences that are not requested by the subscriber or user.
Statistics
The technical storage or access that is used exclusively for statistical purposes. The technical storage or access that is used exclusively for anonymous statistical purposes. Without a subpoena, voluntary compliance on the part of your Internet Service Provider, or additional records from a third party, information stored or retrieved for this purpose alone cannot usually be used to identify you.
Marketing
The technical storage or access is required to create user profiles to send advertising, or to track the user on a website or across several websites for similar marketing purposes.
Manage options Manage services Manage vendors Read more about these purposes
View preferences
{title} {title} {title}